In an important test case, the English High Court has rejected a challenge to the validity of the Financial Collateral Arrangements (No 2) Regulations 2003, which create a special statutory regime for the protection of financial collateral arrangements.In R (Cukurova Finance International Limited and Cukurova Holdings AS) v HM Treasury and Alfa Telecom Turkey Limited, Cukurova had applied for permission to challenge the validity of the Regulations by way of judicial review. They argued that the Treasury had acted ultra vires under section 2(2) of the European Communities Act 1972 when implementing into domestic law the provisions of Directive 2002/47/EC on financial collateral arrangements.The Directive creates a minimum regime. In common with nine other EU Member States, the UK decided, as a matter of policy and after consultation, to implement the the provisions of the Directive more widely. The Regulations extend to financial collateral arrangements between non-natural persons, whether or not they are financial institutions, public bodies and other entities falling within the scope of Article 1(2)(a)–(d) of the Directive. The Directive applies only to financial collateral arrangements where the collateral-taker or the collateral-provider falls into one of these categories.